iStock_000019555509SmallMost construction contracts contain a “no damage for delay” clause that generally prevents a contractor from demanding compensation for a late starting or otherwise delayed project. But, if the owner or is representative actively interferes with the project, a contractor may still recover damages for delays.

The recent case of C & C Plumbing and Heating v. Williams County, out of North Dakota found the owner liable for delays even though the contract contained a no damage for delay clause. The contract in that case provided:

17.2.2 The Contractor acknowledges and accepts the prospects of such delays, interferences and interruptions to the progress of the Project and to the Work as are inherent in the construction industry. The Contractor represents that they have included compensation for such delays, interferences and interruptions in the Contract Sum.

17.2.4 The Contractor shall not be entitled to additional compensation or damages due to delays, interferences or interruptions to the Work or the Project, but shall be entitled only to an appropriate extension of time in accord with the General Conditions of the Contract for Construction.

Even though the contract specifically provided that the contractor could not recover additional compensation or damages because of delays, the court awarded damages to the contractor because the owner’s construction manager actively interfered with the project. But, the court made clear that this is no easy defense to prove. To prevail on this defense, a contractor must show that an owner committed a willful act that unreasonably interfered with performance of the contract, but was more than a simple mistake, error in judgment or lack of complete diligence.

In this case, the construction manager rejected the steel erector’s plan for construction and insisted that the steel erector put up steel wherever it could to demonstrate to the owner that progress was being made. The court found that the construction manager’s conduct actively interfered with the project and caused compensable delays.

Take Away: Despite no damage for delay clauses being generally enforceable, if the owner actively interferes with your work, you may still recover delay damages.